Five Practical Tactics for Large Hospital Systems 

September, 2020 - Ken Marlow

While the pandemic and subsequent economic downturn are creating unprecedented challenges for health systems across the country, opportunities for collaboration remain as strong as they had been pre-COVID, and large health systems are well positioned to take advantage of new opportunities.

In light of this, Waller has partnered with Kaufman Hall to develop a guide for health system leaders, The Health System Growth Imperative: Charting Opportunities During the Pandemic and Beyond. Here are some practical tactics and recommendations from the report for charting your system’s future course.

Double down on your strategic plan.

Large health systems have been reaping the benefits of scale for years, but now is the chance to capitalize on a unique environment for strong strategic transactions. The pandemic is upending the delivery of healthcare in America, and this is the chance to take your system’s growth strategy to the next level.

Whether your strategy is to seek new geographies, deepen integration within your existing footprint or grow your continuum of care, it’s time to position for the future. To start, large health systems should undertake a baseline projection and model analysis in review of their goals and objectives. It is important to undertake such analyses to identify ways in which a prospective partner could advance your system’s strategic plan or growth objectives.

Hone your message.

The world has changed, but have you updated your message to potential partners? Focus on the value you have always brought to outside partners, but recognize that dynamics have shifted, so the message must now shift too. Remember that how you are selling your system is just as important as what you are selling.

As the number of COVID-19 cases in the United States continues to rise, so too will the level of scrutiny of healthcare M&A transactions. This again indicates the critical importance of a solid message and plan to be developed in advance of the pursuit of the transaction. This includes the codification of the aims of the pursuit (before it begins), the articulation of organizational challenges, a careful screening of potential suitors against the objectives, and a Board-involved, management-led and stakeholder-influenced process that supports the desired outcome.

Talk to everyone; partner with those aligned.

Throw out all prior assumptions about who may or may not want to talk to you. The pandemic has placed a premium on collaboration, even amongst former rivals. So carry your newly honed message to the streets and take advantage of the universal desire to band together, both during the pandemic and beyond.

For many years, investor-owned health systems have had significant challenges getting in front of not-for-profit health systems and academic medical centers, let alone consummating a transaction. Today, however, with the enormous challenges facing independent hospitals and smaller health systems, the investor-owned health systems may be seen as invaluable partners simply too good to pass up. Strong investor-owned health systems can offer access to capital, operational expertise and scale, and full integration.

Do not relax the standards for ‘fit’ of collaborations, but keep an open mind. Partnering with health systems of a similar mission or complementary and largely non-overlapping footprints could have the benefit of further expanding the reach and depth of your mission, while also leveraging the benefits of scale to reduce costs, increase operational and clinical expertise and potentially increase payor reimbursement.

Innovate.

The pandemic has shown that care delivery must continue to evolve in order to be effective and affordable. Explore new modes of delivery like telemedicine, and invest in new technologies that take care outside of the four walls of the hospital. Areas such as behavioral health, home health and long-term care, among others, are also on the wish list of many large health systems seeking to provide a broader continuum of care while reducing the rate of readmissions in their hospitals.

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